If you’re an American, odds are good that you’re overweight or obese.
That’s bad for your health but good for those who try to help you fight the war on fat.
After all in 2009, direct medical and healthcare costs spent on overweight or obese Americans hit $159 billion — up at a 9.4% annual rate from 2003.
Any by 2020, the Department of Health and Human Services expects that figure to climb at a 6.5% annual rate to $319 billion.
By the end of 2012, those overweight or obese Americans are expected to spend $61 billion on products and services to help them drop weight, including:
- Diet foods, drinks, and low-calorie sweeteners;
- Health clubs and workout videos;
- Medically supervised and commercial weight loss programs;
- Children’s weight-loss camps;
- Diet books; and
- Appetite suppressants.
So there’s no wonder that there are 24,900 competitors vying for it, according to IBISWorld.
And they try to win based on their program’s recognition, reputation, effectiveness, safety and price.
In this highly fragmented industry, IBISWorld estimates the market shares of four leaders:
- Weight Watchers International (WTW): 3% market share and $1.8 billion in 2012 revenue,
- Nutrisystem (NTRI): 0.7% and $400 million,
- Medifast (MED): 0.6% and $365 million, and
- Nestle’s Jenny Craig: 0.5% and $319 million.
As David Burwick, President, North America, explained in an October 10 interview, Weight Watchers has a great founding story — experiencing three major stages in its development.
According to Burwick, “Weight Watchers was started in 1963 by a Queens housewife, Jean Nidetch, who was trying to lose weight.”
Nidetch attended sessions at the obesity clinic run by the New York City Board of Health that advised her “No skipping meals. Fish five times a week. Two pieces of bread and two glasses of skim milk a day. More fruits and vegetables.”
Nidetch lost weight but did not like the way the leader ran things so she started hosting friends in her living room, and eventually the group expanded until “dozens were crowding in.”
In those meetings, people discussed the challenges of losing weight and shared new strategies to help them reach their goals.
With advice from a pair of people who attended her meetings, Nidetch launched Weight Watchers International in 1963; and went global in 1967 with 102 franchises in the United States, Canada, Puerto Rico, Great Britain and Israel.
In 1979, H.J. Heinz paid $71 million for Weight Watchers but disgorged it in 1999 to Invus (Invest in the U.S.).
Invus is an investor group founded by the Boston Consulting Group consultants who had advised a Belgian sugar company’s owners to sell their business and use some of the proceeds to invest in the U.S. — and that included buying Weight Watchers from Heinz. In November 2001, Invus sold shares to the public. Their value has risen 84% since then.
Weight Watchers offers consumers two services:
- Weight Watchers meetings: Weight Watchers staff “give members a private and confidential weigh-in, followed by a meeting facilitated by a Leader who also lost weight with the program. Members receive helpful tools, guides, strategies and tips in a supportive and caring environment, with 24 hour access to mobile and internet resources. Meeting fees vary with an average of $42.95 per month,” according to Burwick.
- Weight Watchers Online: Subscribers receive tools to follow the program “completely online at their own pace. Site are customized for the specific needs of men and women. Subscribers have access to “more than 40,000 food options, 3,500 recipes, and interactive tools to help manage daily food choices and activity. Prices vary starting at $5.00 per week.”
Burwick credits some of Weight Watchers recent success to its Points Plus program, based on “the latest nutritional science that factors in the way your body processes food.
Foods are assigned a PointsPlus value based on fat, fiber, carbohydrates and protein guiding you to make smarter food choices.”
Burwick pointed out that “foods laden with sugar and fat would have a higher PointsPlus value than a lean protein. Plus, all fruits and most vegetables have a zero PointsPlus value.
Members can also earn PointsPlus values for activity above and beyond regular daily activity.”
Burwick also pointed out that Weight Watchers is developing a so-called business-to-business strategy. Weight Watchers provides companies with membership options, including hosting meetings on their premises. This makes it possible for workers to obtain the benefits of the service without needing to leave the office.
Nutrisystem focuses just on the food. Its weight-management system is priced between $300 and $400 per month — consisting of monthly food packages, which contain a 28-day supply of breakfasts, lunches, dinners, and desserts.
But Nutrisystem is struggling thanks to that high sticker price that is costing the company some customers.
In 2011, it introduced price discounts that sliced into profits and may have contributed to the board’s decision not to renew CEO Joe Reding’s contract — though it has yet to hire a replacement.
Medifast is doing better. As Medifast Chairman and CEO, Michael MacDonald, explained in an October 19 interview, MacDonald took over in February 2012 from his late brother, Brad MacDonald, Executive Chairman of the Board of Medifast Emeritus.
Brad, who fostered Medifast’s growth and played a key role in building up the company’s highly successful Take Shape For Life division in which “10,800 happy Medifast health coaches provide encouragement, education, and mentoring to clients and guide then as they lose weight on the Medifast 5 & 1 Plan.”
Medifast sells weight-loss products including “meal options that range from bars and shakes to hearty soups.” The Medifast weight loss program requires that clients “choose five of 70 Medifast meals” eat one bar at breakfast, another at lunch, and then consume one meal that they prepare for themselves.
Medifast distributes its products through four channels: Medifast Direct (its e-commerce site), Take Shape for Life, 88 corporate and 32 franchise Weight Control Centers, and medical providers.
Within the next five years, MacDonald forecasts that Medifast will become a billion dollar company. He sees its Take Shape for Life unit growing from its current $200 million; its franchises expanding from 32 amd to open 40 more centers in the next three or four years; and its partnership with MedEx, a Mexican pharmaceutical company that will distribute its products as a way prevent obesity among citizens in Mexico City through 5,000 physicians.
Jenny Craig – it offers personalized counseling through 700 retail outlets, over the phone or Internet and sells 80 food items — is struggling.
According to its June 2012 Half Year report, ”Unfortunately, [Jenny Craig] continues to be under pressure in the U.S. We continue to take corrective actions and it’s taking longer time for us to see some results to materialize.”
But as Jenny Craig CEO, Dana Fiser, explained in an October 26 interview, the company has a huge growth opportunity thanks to its approach to alleviating the growing obesity and epidemic.
According to Fiser, “Projected increases in obesity rates and heart disease by 2030 are shocking.”
Fiser believes that Jenny Craig meets the need — underscored by this epidemic — for a “more proactive approach to weight loss and weight management.”
PMRI is tapping its influence — Bill Clinton is a fan of Ornish’s approach — and reams of medical research to encourage people to make diet and lifestyle changes that can reverse heart disease, cancer, and other diseases.
In an October 10 interview from his Sausalito, Calif.-office, Ornish explained that he set up PMRI in 1993 as a public non-profit research institute to investigate the effects of diet and lifestyle choices on health and disease.
Ornish cited a series of studies published in medical journals indicating that changes to diet and lifestyle could:
- Reverse heart disease,
- Help people lose 16 pounds within a year,
- Slow the growth of prostate cancer, and
- Change the makeup of genes by adding telomerase to them.
Ornish was proud to note that after years of PMRI’s effort, Medicare officials reviewed the medical research necessary to conclude that Medicare should cover patients’ costs for the Dean Ornish Program for Reversing Heart Disease, which teaches a plant-based, meatless diet, meditation and regular exercise.
This program costs about $30,000 per patient. In 2010, Medicare officially approved this program as an intensive cardiac rehab program, and the first patients started in May 2011.
But making money is not Ornish’s goal; instead he says, “I should make enough to get by.
The true measure of my life will be how many lives I changed for the better.”
The opportunity to help Americans fight fat is huge and growing — and in this fragmented market there are plenty of ways to make money off of it.
Whether any of them permanently reverse the trend remains to be seen.
Weight Watchers Winning $61 Billion War On Fat - Forbes